Australia – Westpac Consumer Sentiment
Today, at GMT 12:30 a.m., the Westpac Banking Corporation in Australia released its consumer sentiment index, which measures the changes in the level of a diffusion index by surveying 1,200 consumers in the country.
Binary options investors consider the consumer sentiment to be one of leading indicator of future consumer spending, which makes up a large portion of the Australian GDP. Hence, the large sample size of the Westpac consumer sentiment survey makes it one of the best leading indicators of the overall Australian economy.
In May, the Westpac consumer sentiment index reading came out suggesting a 6.4% increase. However, this month, the survey indicated consumer sentiment has gone down by 6.9%.
New Zealand – Official Cash Rate
Later in the night, at GMT 9:00 p.m., the Reserve Bank of New Zealand (RBNZ) will release the official cash rate, which is the interest rate that banks and other financial institutions use to lend funds among each other in the country.
The official cash rate is one of the most important factors in the valuation of the New Zealand Dollar against other currencies in the global foreign exchange market. In fact, binary options traders often analyze all other economic indicators just to predict the future cash rate. Although the cash rate is highly predictable, any unexpected change by the RBNZ can create large price swings in the market.
Since July 2014, the Reserve Bank of New Zealand has kept its official cash rate at 3.50%. However, as the inflation has come down rapidly in the last few quarters, the RBNZ is expected to cut its rate anytime in 2015. Regardless, the official forecast for the RBNZ’s official cash rate for this week is still set at 3.50%.
Trade Recommendation for the AUD/NZD
The AUD/NZD uptrend line was broken on May 24. However, the pair found strong support around the 1.0585 level on May 28 and formed a bullish pin bar. The high of the pin bar was broken on May 29, and the bullish momentum pushed the price towards the resistance zone around 1.0750 by the end of May.
On June 3, the AUD/NZD price reached the psychological resistance zone around 1.0850 level and soon started a retracement downwards. Yesterday, the AUD/NZD price once again was rejected around 1.0750. Currently, the AUD/NZD price seems to be trading within a tight range between 1.0750 and 1.0850. Although the Westpac consumer sentiment in Australia decreased over the last month, if today’s daily price closes above the 1.0750 level, it would form a potential bullish pin bar.
Under the circumstances, it is recommended that traders consider placing a CALL order with their binary options brokers for the AUD/NZD, once the price breaks above today’s high, at 1.0804.
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